THE British government will demand a big say in the direction some of its largest banks now take as the price for its 50-billion-pound (US$86 billion) emergency rescue plan.

"We have now entered a new era for global banking," said Paul Niven, head of asset allocation at the fund manager F&C. "In return for taxpayers' money, the state will gain a level of control over their governance, pay and lending practices. Regulation will increase markedly, and controls on all elements of banking practices will rise."

Wednesday's plan had been expected to give the government a stake in several banks but, despite a dramatic crash in share prices this week, the state has held back from taking direct holdings and looks set to ask for preference shares in return for its financial backing.

Preference shares pay fixed interest to holders, ahead of the claims of ordinary shareholders. But they often don't have voting rights.

"The banks are going to be run as a commercial operation, albeit with government help," British Finance Minister Alistair Darling said. "There is a fundamental difference."

Royal Bank of Scotland could seek a capital boost of 9 billion pounds, Cazenove analysts estimated. That would represent half of its market value, even after a 10-percent rally in its shares on Wednesday.

Barclays could take 6 billion pounds and a combined Lloyds TSB/HBOS may take 5.5 billion pounds, Cazenove said, equivalent to about 25 percent of their market values.

But how much capital each bank will ask the government for and the precise terms of the recapitalization remain unclear.

"We do not know which banks will use the facility, nor what the terms will be," Manus Costello, analyst at Merrill Lynch, said in a note.

Of the eight banks covered by the scheme, Santander's Abbey, HSBC and Standard Chartered said they will not draw on the capital.

Lloyds TSB, Nationwide Building Society, RBS, HBOS and Barclays have collectively committed to boost capital by 25 billion pounds.

The British government did not set a target for capital, but banks could boost their core tier-one capital ratio by about 1 percentage point on average, one industry source told Bloomberg News.

This would lift the ratio - a key measure for how much capital a bank holds as a cushion against shocks, protecting depositors - for most banks to more than 7 percent. This compares with recent lows of between 4 and 5 percent.

Capital is likely to be made available by the issuance of preference shares or permanent interest-bearing shares, which have been commonly used by Britain's mutually owned building societies.

Banks are not obliged to take up the government's capital injection offer and can attempt to raise their own capital if they are keen to avoid any dilution of their shareholders.

Barclays has a capital deficit of about 4.6 billion pounds and RBS's deficit is about 3.4 billion, or 5.5 billion if it fails to sell its insurance arm, according to Costello.

Barclays said it will participate but will protect shareholders, signalling existing investors could be offered the chance to inject cash first.

UK banks have already raised over 20 billion pounds to replenish capital this year, but they face falling profits amid a deteriorating economy and more writedowns.

Some of this additional capital has come from institutions as far afield as Singapore, Qatar, China and Japan. But with the credit crisis spreading across the globe, access to capital has become far harder.

Dividends were already expected to be cut, and the government said its offer of capital will "take into account dividend policies and executive compensation practices."

Another of the strings attached is that it will require "a full commitment" from the banks to support lending to small businesses and home buyers.